S&P 500 Posts Best Week In 7 Years: 5 Best Leveraged ETFs

The S&P 500 and Nasdaq Composite Index logged in the best week since 2011, while the Dow Jones posted its best week since November 2016 on optimism over the U.S.-China trade truce and a dovish Fed view. This marks a sharp reversal from a week ago when the S&P 500 slipped to correction territory by declining 10% from its latest peak.  

Last week, Fed Chair Powell said that interest rates were "just below" the level that would be neutral for the economy — meaning they would neither speed up nor slow down economic growth. This is in contrast to his October remarks that the rate was “a long way” from neutral -which led to worries that the rate increases would crimp growth. As such, the dovish view has charged up the bulls.

Further, the subsequent minutes from the central bank's latest meeting suggests that the Fed will likely raise rates this month and signals 'flexible' approach in 2019. All these comments indicate that the central bank may pause hikes next year.

At the G-20 summit in Buenos Aires, Trump held off new tariffs of 25% on $200 billion worth of Chinese goods for 90 days, while Xi Jinping agreed to boost purchases of U.S. agricultural goods to reduce trade imbalance between the two countries. This has eased fears of an escalation in long-standing trade disputes between the two countries.

The bullish trend is likely to continue and resulted in huge demand for leveraged ETFs last week as investors seek to register big gains in a short span. These products create a multiple exposure (i.e. 2x or 3x) exposure to the daily performance of the underlying index by employing various investment strategies such as swaps, futures contracts, and other derivative instruments.

Below we have highlighted five U.S.-focused ETFs that crushed the market last week with abnormal returns in a short period and will likely continue to do so.

BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGUFree Report) – Up 20.4%

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